Nov 4 HK WRAP HSI -54pts T/O +33% US Election looks too close to call

09 Nov

Nov 4 HK WRAP HSI -54pts T/O +33%  US Election looks too close to call

HSI -54pts (-0.2%) 24,886 HSCEI +28pts (+0.3%) 10,099  T/O HK$172.82bn (+33.3% DoD)  

markets opened lower but working higher, Services & Composite PMI was largely better. Investors watching the US Election results which currently look like being close.
US Futures DOW opened higher and initially rallied to +230pts but have since eased back to +90pts. S&P and NDX with higher. But they remain volatile as election results begin to get posted.
Data MBA Mortgage Applications and 30 year Mortgage Rate, ADP Employment Change, Balance of Trade, Exports, Imports, Treasury Refunding Announcement, Services PMI and Composite PMI, ISM Non Manufacturing Data (New Orders, Prices, Employment, PMI), EIA Oil Report.
Earnings Qualcomm, Allstate, Expedia, Hilton Worldwide, Scotts Miracle-Gro, Wendy’s, Perrigo, Zynga, Manitowoc, Public Storage, Pioneer Natural Resources, GoDaddy, Qorvo, Tribune Publishing, MetLife, Fitbit

CHINA CSI 300 Closed +36pts (+0.8%) 4,814  opened higher and rallied to 4,804. Sentiment +VE as China released some elements of the next 5 year plan and delivered good Caixin data. A Focus on tech but balancing finance and property too. Ant IPO being withdrawn largely ignored.  Having failed to breakout it then tested that level for around 30 minutes before selling down to 4,770 level; below yesterday’s close but then spiked 54pts to the day high 4,825 but then sold down into lunch @ 4,802.  PM saw an initial sell off to 4,785 before working higher to 4,815 and then trade sideways into the close.
Shanghai Composite Index +6pts (+0.2%) @ 3,277
Shenzhen Component Index +80pts (+0.6%) @ 13,660
ChiNext Index +6pts (+0.2%) @ 2,751

CHINA Caixin Data
Services PMI Oct 56.8 vs 54.8 Sept (F/cast was 54)
Composite PMI Oct 55.7 vs 54.5 Sept (F/cast was 54
The sixth straight month of growth and the second-fastest for over a decade. New orders accelerated, (rate of increase being the third-steepest since Sept 2010). Employment grew for the third month (most in over a year). Outstanding workloads rose slightly, but softened vs September. Export sales fell further, on rising covid cases globally. Input cost inflation; highest in over two years, (higher staff and purchasing costs). Firms increased their output prices slightly, with the rate of increased little-changed from September. Sentiment improved to its highest since April 2012.
This was the highest reading since June. The second-highest in 10 years, the composite new orders gauge hit the highest point for a decade, and employment continued to recover. Meanwhile, cost pressures picked up, with average input prices rising at the fastest rate for two years. Output charges, however, rose slightly. Lastly, sentiment rebounded.

HSI Pre Market opened 24,790 -149pts vs +86pts ADR’s at 25,025 with Alibaba -9.3% on news Ant’s IPO had been pulled by the regulator, Tencent was weak too. Market then rallied to 25,094 before selling back down to 24,740 level. Then rallied back to 25,055 before easing lower into lunch. PM saw the market work higher in choppy trading testing the 25,055 level a few times but unable to break out and around 3:30pm the market sold down to 24,820 before a small bounce into the close.
Sportwear names saw good interest with Anta (2020 HK +5.3%) hitting a new high.

Pre Market 
PMI Oct 49.8 vs 47.7 Sept (F/cast was 48)
Highest since March 2018 Output fell the least in over 2-1/2 years and new orders shrank at the softest pace in four-months, with demand from the mainland falling the least in 30-months.
Employment fell back into decline with reports of redundancies. Firms continued to scale back buying activity in response to weak demand. Consequently, stocks of purchases fell further, though at the weakest rate since June. Pressure on supplier capacity persisted, as indicated by a further sharp increase in delivery times. On the price front, overall input prices rose for the first time since June while output charges fell further. Finally, sentiment remained negative, though the degree of pessimism was the weakest since June 2019.

Centre for Health Protection said there were 3 new COVID-19 cases in Hong Kong today (vs 9 Tuesday) 2 local infections, 1 imported.

SHORT SELLING Wednesday 15% vs 14% Tuesday
Top Shorts 
Hang Seng Bank (11) 51%, Ping An (2318) 45%, CCB (939) 38%, Bank of China (3988) 33%, Sunny Optical (2382) 32%, AIA (1299) 30%, BOC HK (2388) 30%, ICBC (1398) 28%, Galaxy Ent (27) 27%, CLP (2) 26%.

HSBC HOLDINGS (00005.HK) CEO Noel Quinn, at an online forum, said more than 90% of staff have their job contents adjusted
to become more digitalized owing to pandemic impediment on the bank's operation. That said, customer relation remains significant to bank whereas digitalization is merely one of the alternative business channels which should not substitute human staff.
The Census and Statistics Department (C&SD) announced that the value of total receipts of the restaurants sector in Q3 2020, provisionally estimated at $17.0 billion, -35.3% YoY. Over the same period, the provisional estimate of the value of total purchases by restaurants decreased by 33.4% to $5.7 billion.
CKH HOLDINGS (00001.HK) the Group has reached a substantial agreement with Cellnex Telecom S.A. on the key commercial terms for the disposals of the Group’s interests in its telecommunications infrastructure assets in Europe. Estimated total proceeds on completion of the Transactions are approximately EUR10.0 billion, including minority partners’ share. The company emphasized that no decision has been taken to proceed with any transaction. Agreements in relation to the Transactions remain subject to finalization of definitive documentation.
Centa-Salesman Index (CSI) last stood at 52.9 this week, down 0.41 pts weekly, said Centaline Property. The index lost a total of 1.35 pts in three straight weeks amid market apprehension about the economic outlook.

despite crude rising overnight to the highest in a week as OPEC+ considered delaying a planned easing of output cuts. OPEC+ will "accelerate" the recovery in oil markets at their next meeting, OPEC Secretary said, adding the latest virus wave will cast a shadow on next year's outlook. US API data also showed a surprise drop. CNOOC (883 HK -0.7%) CH OILFIELD (2883 HK +0.2%) PETROCHINA (857 HK -0.8%) SINOPEC (386 HK -2.5%).
*BROKERS WEAK CICC (3908 HK -6.3%), having had a major role in the ANT GROUP listing, and HKEX (388 HK -1.7%) as the ANT IPO collapsed. Many local brokers announced they would waive fees associated with the pulled listing
*FINTECH/E-COMMERCE WEAK after regulators pulled the listing of ANT GROUP's shares dual listing in Shanghai and HK, requiring the fintech giant to fulfill additional listing rules and regulations, due to changes in the regulatory environment. Suspected rotations with the sector as ALIBABA (9988 HK -7.2%) after its ADR was -8% overnight.
TENCENT (700 HK -1.4%) also impacted by the news. Also said it will join a lawsuit that users of its WeChat app filed against the US govt, but only to ensure that proprietary business information is kept confidential.
MEITUAN (3690 HK +7%) despite it said it has no plans or a timetable for a secondary listing on the mainland, denying yesterday's market rumor. JD.COM (9618 HK +2.7%) NTES (9999 HK +3.3%).
*TECH & COMPONENTS WEAK after yesterday's rally, as US Election results turned uncertain as the session went on; that could impact China-U.S. trade tensions. SUNNY (2018 HK -2.7%) SMIC (981 HK -7.3%) HUA HONG (1347 HK -11%). LENOVO (992 HK +8%) on good quarterly profit, PC sales increased to meet remote work and study needs. It reported a 53% increase in net income to $310m in 3Q. A number of broker upgrades.
XIAOMI (1810 HK +7.9%) surged ahead of India's Diwali shopping bonanza, with India being the world's second-largest mobile market.
*SOLAR WEAK names saw heavy-selling, after some polls showing Biden lags behind in key swing states. Biden earlier proposed a US$2t climate change response plan before the election, promising to achieve net zero carbon emissions in the U.S. by 2050. Also FT Big Read looking at President Xi’s zero carbo aim and the reality of coal power station building in China.
XINYI SOLAR (968 HK -8.4%) FLAT GLASS (6865 HK -10%) GCL-POLY (3800 HK -4.3%).
*CHINA PROPERTY FIRM on good Oct sales data.
CH VANKE (2202 HK +0.2%) Oct contracted sales +20.6% YoY (-4% MoM) to 52.31b yuan.
CH EVERGRANDE (3333 HK +1.1%) Oct contracted sales was 181.97b yuan. Jan-Oct contracted sales totalled 632.59b yuan and represents 97.3% of its 650b yuan yearly target. CIFI (884 HK +1.8%) SUNAC (1918 HK +2%)..

Regional Markets
opened higher playing catchup and has then traded sideways in the range 23,600/800 for most of the day. In the PM it traded at the upper end of the range but sold down at the end to close +1.7% @ 23,695
Kospi opened higher initially tested to 2,370 and then sold down to 2,340 (just below Tuesday’s close), bounced to 2,360 sold down. Then rebounded to 2,360 and traded sideways for the rest of the session 2,365/350. Closed +0.6% @ 2,357
Kosdaq followed a similar pattern rose to 826 in early trades and down to 815 rebounded and worked slowly higher for the rest of the day to close just off the high +1% @ 827
TAIWAN opened higher tested up to 12,800 and down to 12,736 in early traded. Late morning worked higher to 12,885 and then trade sideways to close +1% @ 12,868

Northbound Rmb 36,063m Buy 17,912m vs 18,150m Sell
Southbound HK$ 15,357m Buy 5,055m vs 10,302m Sell
Northbound Rmb 47,265m Buy 23,634m vs 23,623m Sell
Southbound HK$ 12,817m Buy 5,137m vs 7,679m Sell

Active Heavyweights
BABA (09988.HK) -7.5%
MEITUAN-W (03690.HK) +6%, hitting new high
HKEX (00388.HK) -1.7%
TENCENT (00700.HK) -1.6%
AIA (01299.HK) +0.7%
PING AN (02318.HK) +0.7%
CCB (00939.HK) unchanged

HSI & HSCEI Constituents on the move
XIAOMI-W (01810.HK) +7.9%
CM BANK (03968.HK) +6.4%, hitting new high
ANTA SPORTS (02020.HK) +5.3%, hitting new high
CONCH CEMENT (00914.HK) +3.9%
GEELY AUTO (00175.HK) +3.1%, hitting new high
WHARF REIC (01997.HK) +3.1%
CHINA TOWER (00788.HK) -3.1%

HSMI & HSSI Constituents on the move
CAR INC (00699.HK) +11.3%
HYGEIA HEALTH (06078.HK) +11.1%
HUA HONG SEMI (01347.HK) -10.8%
KINGDEE INT'L (00268.HK) +10.1%
GOLDWIND (02208.HK) +5.1%, hitting new high

Joseph Chan, Acting Secretary for Financial Services and the Treasury, being asked whether the government will shower each adult citizen again with $10,000 cash handout amid hardships, said the government should apply cautious wealth management and retain financial power in wake of economic downturn and uncertainties around pandemic. He said the government is now having no plan to distribute handout again to Hong Kong permanent residents. Asked whether Special Stamp Duty (SSD) will be waived on property disposals which are made by jobless landlords entering the market less than three years, Chan said SSD forms part of the demand management, and that the government does not intend to annul or waive the SSD on jobless landlords.
Deutsche Bank is seeking ways to terminate its relationship with U.S. President Donald Trump post the U.S. elections due to the negative publicity stemming from the tie, Reuters learnt from parties with direct knowledge of the matter.

Not in this mornings report
White House has called a halt to blacklisting BABA-SW (09988.HK)'s ANT GROUP (06688.HK) following a phone call between Baba's President Michael Evans and US Commerce Secretary Wilbur Ross, Reuters citing insiders.
China has to accelerate its digital economy buildout, according to the proposals for formulating the 14th Five-Year Plan (FYP) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035. Beijing will foster a deep integration of digital economy with real economy, in a bid to develop globally competitive digital industrial clusters. Beijing will hence lay out new infrastructure, while speeding up the construction of fifth-generation mobile communication, industrial internet and big data centers. It also said China aims to foster a balanced development of finance, real estate and real economy, while effectively connecting upstream and downstream sectors as well as production, supply and marketing.
CHINA VANKE (02202.HK) for the month ended 31 October 2020, the Company achieved a contract sales amount of RMB52.31 billion, +20.6% yearly.

* The email will not be published on the website.